02 December 2009
Telford Homes Plc (AIM:TEF), the residential developer in East London noted for regeneration projects within public sector partnerships, is pleased to give the following trading update ahead of its preliminary results for the year ended 31 March 2008 which will be released on 28 May 2008.
Telford Homes has had a strong second half with continued success in pre-selling homes to the investor market at an early stage in the development process. This policy of de-risking the business through pre-selling properties is integral to the Company's longer term strategy.
A number of planning consents have been achieved during the last six months. In particular a major joint venture development with Genesis Housing Group in Bethnal Green Road has received a resolution to grant planning permission for 360 homes.
As a result of the Company's strong trading performance, the Board expects to announce results in line with market expectations for the year ended 31 March 2008.
In the last three months, three new development sales launches have taken place with excellent results notwithstanding the lack of confidence in some aspects of the national housing market.
On 31 January 2008, the 66 open market apartments at Vellum, Walthamstow, E17, were launched and to date contracts have been exchanged on 23 of these properties. In addition, on 20 February 2008, 41 open market apartments at Kinetica, E8, were launched with contracts subsequently exchanged on 24 properties. Both developments are expected to be completed in 2010. At Casa, E14, the Company is pleased to report that all 14 open market apartments have been sold with contracts exchanged during March 2008 and completion expected in early 2009.
Queen Mary's Gate in South Woodford is the Company's only major sales outlet with properties largely for the owner-occupier market. The first phase is being completed now and is 93% sold with contracts exchanged on 172 of the 184 private apartments. Over 100 of these homes have now been handed over to customers. The second phase is due to be completed in November 2008, and currently 17 of the 93 private apartments are sold with contracts exchanged.
Current market conditions
The national housing market has been challenging in the last six months, as has been widely reported by other UK house builders. The Company has continued to pre-sell homes in East London during this period and contracts have been exchanged for the sale of 85% of the 1,700 homes that have been under construction for more than three months. The number of properties pre-sold on current developments puts Telford Homes in a very secure position going forward.
The key issue now is the restricted availability and higher cost of mortgage finance and therefore greater difficulty for prospective purchasers in financing their properties. This is limiting the rate of sales in the short term, both to investors and owner-occupiers, but the Company will be able to time new sales launches appropriately given the level of pre-sales already achieved. Restrictions in mortgage finance also make the process of legally completing finished properties more complex. In spite of this the Company has successfully managed this process on over 250 completions in the last four months.
Due to the uncertainty in the national housing market and the associated mortgage finance issue, the Board has taken a prudent approach to investment in land in the last six months. This has meant reduced overall expenditure with even greater focus on partnerships and joint ventures with housing associations and stock transfer organisations. This approach is expected to continue into the new financial year with the protection of cash flow remaining a priority.
Current market conditions will affect the Company in the new financial year for as long as they continue but the medium to longer term outlook remains positive. The regeneration of East London is ongoing, supported by the Olympic development, and demand for rental properties in the area is still strong. Recent success in pre-selling to investors demonstrates the market's belief in the Telford Homes product and in the future success of East London.
The partnerships that Telford Homes has with housing transfer organisations such as Eastend Homes and Poplar HARCA, as well as many housing associations, underpin the future supply of land into the development pipeline and will drive further growth of the Company in the future.
Andrew Wiseman, Chief Executive of Telford Homes, commented: "The year to 31 March 2008 has been another successful period for Telford Homes. Recent development launches have gone well and as a result we expect to meet market expectations for the year, following a period of continued strong growth."
"Our business model is robust due to our policy of reducing risk through pre-selling properties and maintaining a controlled development pipeline. We are well positioned to benefit when the availability of mortgage finance improves and confidence returns to the housing market. Until this happens we will be cautious in our approach to the new financial year. The medium to longer term outlook remains positive for the Company and we will continue to work closely with housing partners over the coming years to increase our contribution to the regeneration of East London."
For further information:
|Telford Homes Plc|
|Andrew Wiseman, Chief Executive||Tel: +44 (0) 1992 809 800|
|Jon Di-Stefano, Financial Director|
|Alex Borrelli||Tel: +44 (0) 020 7408 4090|
|Chris Lane / Joanne Shears||Tel: +44 (0) 20 7398 7708|